April 2005
For strong economic harvest, invest in higher education
David Goodrich
President and CEO of the Central Indiana Corporate Partnership, a regional alliance of CEOs and university presidents focused on key economic issues
Every Indiana corn farmer knows — to harvest in the fall, you plant in the spring. As a matter of fact, it's planting time right now.
Think of Indiana’s economy in similar terms: we’re seeking a different kind of harvest — business opportunities in high-tech industries like the life sciences and advanced manufacturing. But to reap these rewards, we first have to sow the fields. In this case, the seed of economic growth is the cutting-edge research that can grow into new products, new companies and good-paying jobs.
Fortunately, Indiana’s universities provide fertile ground for this research. But for a good economic harvest later, the Indiana General Assembly must first invest in the research capabilities of our institutions of higher education.
In his influential 2002 book on intellectual capital and economic development, The Rise of the Creative Class, Richard Florida asserts the connection between higher education and economic growth: "The Boston high-tech miracle is due in large measure to MIT. Silicon Valley is unthinkable without Stanford University…The presence of a major research university is a basic infrastructure component [in today’s economy]…more important than the canals, railroads, and freeway systems of the past."
The statistics support Dr. Florida. Let’s look at a few high-profile examples: In 2003 alone, for example, Stanford University filed for more than 300 patents, discoveries that are paying off economically — over the course of its history, such high-profile companies as Google, Sun Microsystems, Silicon Graphics, Netscape, Cisco Systems and Yahoo have emerged from the University. Approximately 150 new businesses are spun out of the Massachusetts Institute of Technology every year - MIT accounts for over 1,000 companies headquartered in Massachusetts. These kinds of numbers and high-profile companies are the stuff of an economic developer’s dreams.
Here in Indiana, our universities are also producing economic results. According to a recent study commissioned by the State of Connecticut, Purdue University ranks among the nation’s top ten universities for its commercialization efforts. From 2002 through 2004, more than twenty new companies emerged from Purdue. Many of these firms located to the Purdue Research Park, the university-affiliated business park and incubator that is home to more than 130 businesses, including Indiana’s largest concentration of high-tech ventures.
In Indianapolis, the Indiana University Emerging Technologies Center is one of the nation’s fastest-growing business incubators, thanks in large part to the significant research base at the IU School of Medicine. Across IU campuses statewide, awards for sponsored research have increased by 75 percent in the past five years to a total of $413 million in 2004 — these research efforts account for nearly 10,000 direct and indirect jobs.
All of this news adds weight to a now-familiar message: Indiana must invest in our institutions of higher education, not only to support public education but to advance economic development as well. If economic recovery truly tops the list of priorities at the statehouse, appropriations for higher education (especially new research initiatives) should reflect its importance as an economic catalyst. Our legislators should craft a budget that supports university research. They should also approve creative funding measures, such as Representative Jeff Espich’s proposal to use bonding authority to make $1 billion in new research grants available through the 21st Century Research and Technology Fund.
With greater investment, who’s to say that our universities can’t compete even more effectively with the likes of MIT and Stanford, putting the Crossroads of America alongside Silicon Valley and the Research Triangle as knowledge-based economic capitals?
If we do nothing, on the other hand, we’ll continue to fall behind the other states that are moving forward. Governor Bob Taft has proposed a $500 million bond issue to expand Ohio's high-tech research capabilities and promote new business formation. In Oklahoma, the legislature recently approved a $475 million bond issue targeting state university research and laboratory facilities. Similar models exist in California, Kansas and Michigan, among others.
Another adage from the farm comes to mind — "Make hay while the sun shines." Our General Assembly has a unique opportunity to invest in higher education and help build the critical mass of intellectual capital that leads to high-tech economic growth. But as the sun starts to set on this legislative session, the time for action is now.
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